Friday, November 22, 2013

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The Markets

It was a relatively quiet day on the London markets but over on the continent it emerged that German business confidence rose by more than expected this month, it now sitting at its highest level since April 2012. Data from think tank Ifo revealed that its business climate index, based on a monthly survey of around 7,000 firms, rose to 109.3 in November from 107.4 in October, an increase which was well above analyst expectations. The news comes after data released yesterday revealed slowing growth in business activity in the Eurozone as a whole, dragged down by a sluggish French economy. Carsten Brzeski, an economist at ING Bank, commented, "Latest confidence indicators confirm that the economy should continue growing at around its potential growth rate in the coming futures."

In the latest battle between tech giants Apple and Samsung, a California jury has ruled that Samsung must pay 180 million pounds to Apple for copying iPhone and iPad features in its devices. The decision is in relation to 13 of the 26 mostly older Samsung devices which Apple insisted were works of plagiarism. The hefty fine means that Apple has now been awarded around 574 million pounds as a result of the case. Apple said in a statement: "For Apple, this case has always been about more than patents and money. It has been about innovation and the hard work that goes into inventing products that people love. While it's impossible to put a price tag on those values, we are grateful to the jury for showing Samsung that copying has a cost."

At the London close the Dow Jones was up by 0.42 points at 16,010.41 and the Nasdaq was up by 11.02 points at 3,413.75.

In London the FTSE 100 closed down by 7.03 points at 6,674.30 and the FTSE 250 was up by 39.18 points at 15,187.68. The FTSE All-Share was down by 1.65 points at 3.549.37 while the FTSE AIM Index increased by 4.57 points to 817.41.

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Broker Notes

Credit Suisse cut its target price on microchip-maker Imagination Technologies (IMTK) from 275p to 235p, retaining its "underperform" recommendation in the process. Credit Suisse expects the Apple supplier's market share to fall from 40% to 32% by 2015 given the slowing volume growth for iPhones. The investment bank is also cautious on the fact that MediaTek, the company's second largest customer, announced the launch of its new octa-core chip, which is based around 8 ARM processors along with ARM Mali-450 graphics. The shares slipped by 0.003p to 0.085p.

Cantor Fitzgerald maintained its "buy" recommendation on lettings specialist Belvior Lettings (BLV), re-iterating its target price of 200p. The broker notes that house prices have risen by 5.8% year-on-year in October, inevitably making it harder for some to get on the housing ladder and forcing people into the rental sector. Cantor is also encouraged by the group's recent placing as it provides the group with the resources to continue building on its profitable franchise. The shares fell by 4.5p to 170.5p.

Canaccord Genuity retained its "buy" stance on oil exploration company Faroe Petroleum (FPM), lowering its target price from 164p to 156p. The broker has cut its target price on concerns centred on the longer term future for the Njord/Hyme production fields, especially the potential costs associated with possible significant redevelopment activities. However, Canaccord sticks with its "buy" recommendation as it is positive on the potential of the current exploration programme. The shares lost 1.25p, finishing at 126.75p.

Blue Chips

Oil producer Tullow Oil (TLW) revealed that its exploration well in Block 13T, onshore Northern Kenya, has discovered and sampled moveable oil. The discovery marks the fifth consecutive find for Tullow in the region. Tullow argues that the discovery de-risks several follow-on prospects located to the north and adds to the significant resource base already discovered in the region. The update comes after last week Barclays Capital retained its "overweight" recommendation and 1,500p target price. The shares inched up by 2p to 887p.

Telecoms giant Vodafone (VOD) today announced the launch of its mobile wallet service which will enable customers to make a wide range of transactions with a wave or touch of their smartphone. The service will launch in Spain today, Germany in mid-December and the Netherlands, UK and Italy in spring 2014. The update prompted Deutsche Bank to maintain its "buy" recommendation and 258p target price. The shares dipped by 0.9p to 229.5p.

Industrial investor Melrose Industries (MRO) has confirmed that it has sold its Crosby and Acco business to a new company controlled by affiliates of Kohlberg Kravis Roberts & Co L.P. for a total consideration of US $1,010 million (623.4 million pounds). Management argued that the disposal was a perfect illustration of its "buy, improve, sell" strategy. As a result of the transaction, it is now thought that the company will return around 600 million pounds to shareholders. The shares remained flat at 293.9p.

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Mid Caps

The Ministry of Justice has announced that plans to transfer responsibility for three South Yorkshire prisons to Serco (SRP) have been cancelled because of the ongoing investigations into accusations that the company overcharged the government for electronically tagging criminals. The deal had already been delayed while the Cabinet Office and accountant PwC reviewed all central Government contracts held by Serco and G4S. Serco, along with outsourcing rival G4S, has now been barred from winning new government contracts pending a wider review of its operations. The shares grew by 1.3p to 439.9p.

Small Caps

Theme park developer Clear Leisure (CLP) confirmed that it has received an offer for its entire holding in land owner Mediapolis SpA by Generali Investimenti Holding, a Milan based building contractor. Generali has elected to either pay 20 million euros in cash or 30 million euros in a mixture of cash and assets. Clear Lesiure management said that the offer fairly reflects the inherent valuation of the company's assets, with the minimum valuation representing 2.5 times yesterday's market valuation of Mediapolis. The shares soared by 1.4p to 2.75p.

Environmental Recycling Technologies (ENRT) , the patent rights holder to the Powder Impression Moulding process which can convert mixed waste plastics into commercially viable products, revealed that one of its customers has gone into administration. 2K Manufacturing Limited, which manufactures an alternative to plywood under the license, sold 30,000 units its product in 2012 and has now found itself in trouble. Environmental Recycling Technologies went on to say that it would do all it could to work with administrators and come up with a solution in the best interest of shareholders. The shares plunged by 0.18p to 0.55p.

International payments facilitator Earthport* (EPO) saw revenues increase by 37% to 4.14 million pounds for the year ended 30th June, while the group's loss before tax fell by 23% to 6.5 million pounds. The company - which can count American Express and Bank of America amongst its clients - claimed that it now has everything in place to deliver significant levels of growth over the medium-term. The shares remained flat at 20.25p.

Plethora Solutions (PLE), the owner of the rights for a treatment for premature ejaculation, said that it was in dialogue with "multiple parties" in relation to securing licensing partners to bring its PSD502 product to market. Although the company did not name names, Plethora said that these parties included "major pharmaceutical companies" as it looks to maximise the commercial prospects of the product. Plethora also hinted that the product should be available in Europe in the second half of next year. The shares swelled by 0.5p to 15.88p.

Private jet operator Hangar 8 (HGR8) announced a 39% increase in revenues for the year ended 30th June, while operating profit grew by 140% to 1.2 million pounds. The company attributed much of its success to its strategy of expanding outside of Europe as many of its competitors have been held back by the struggling European economy. Hangar 8 also said that trading since the period end has been in line with expectations as further aircraft are in the process of being introduced. The shares crept upwards by 3p to 200.5p.

Mining player Thor Mining (THR) revealed that assay results, including one assay of more than 100 grams per tonne of gold, have been received from the 2013 Spring Hill Reverse Circulation drill programme at its Spring Hill gold project. The project, located south of Darwin in Australia's Northern Territory, will now undergo further testing as Thor attempts to assess the true widths of mineralisation. Thor will update the market once further testing has been undertaken. The shares increased by 0.125p to 0.42p.

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* Earthport is a corporate client of a subsidiary of Rivington Street Holdings, the ultimate owner of UK-Analyst.

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